Philips shines a light on fakes

Just a few years ago, the low quality of some suspected counterfeit goods meant that brand protection officials at Philips, the Dutch electronics company, could look at their packaging and easily spot they were fake.

Now, this ease of enforcement “has long gone”, says Jan de Visser, senior director at Philips Intellectual Property & Standards, following an enormous improvement in the sophistication of counterfeit packaging.

“Manufacturing and printing techniques have greatly improved, making it more difficult for people to know whether what they have in their hands is genuine,” he explains. “It really is astonishing.”

For de Visser, this type of advancement can potentially cause problems on a huge scale: he is responsible for protecting a sizeable chunk of around 40,000 trademarks, some of which may be registered in nearly every jurisdiction worldwide.

Aside from trademark data, Philips’ IP statistics are impressive. In 2012, it invested €1.8 billion ($2.3 billion) in research and development (R&D), and now boasts nearly 60,000 patents, 81,000 designs and more than 4,000 domain names.

Philips prides itself on being innovative. Its website dedicates an entire section to innovation, including information about the company’s drive, with the help of academic and industry partners, to improve “innovation efficiency and share the related financial exposure”.

Since forming in 1891, Philips, which operates in more than 100 countries and employs around 115,000 people, has diversified into several markets and now splits its operations between healthcare, consumer lifestyle and lighting. And lighting products, de Visser says, are most often imitated.

“No doubt, it’s lighting. If you look at a general profile of a successful counterfeit product, it starts with something cheap that everybody—rich or poor—needs in a household environment. The more complex a product, the more expensive it is to imitate. When you talk about utility products like ours, the less complex they are the better because that facilitates imitation and manufacturing. So, ordinary lamps are the ones mostly being imitated,” he says.

He may have a large responsibility on his shoulders, but de Visser seems well-placed to implement an effective enforcement strategy. After joining the trademark team as a junior in 1985, he has worked on anti-counterfeiting matters in Singapore and the Middle East. He has even worked in China—generally considered a hotbed for counterfeiting—and since April has been in charge of protecting the ‘Philips’ trademark and the Philips shield emblem from his base in Eindhoven.

One of the forces helping to drive Philips’ response to counterfeiting is anger, owing to the extensive time and money invested in innovation that can be so easily sabotaged.

“We are an electronics company that has a good product reputation, and we invest a lot in R&D and quality. We really stand behind our products and we feel indignant when people try to make undue benefits from this tremendous goodwill we have developed.

“They produce imitations which, without exception, are lower in quality than ours. This is a betrayal of the brand and it dilutes the brand tremendously if the trust is no longer there,” he says.

The “enormous drive of energy” to do things the right way at Philips is what de Visser aims to convey when working with the authorities to combat infringement, he explains. Customs officials are on his radar, and he explains that Sophie Molle of the World Customs Organization (WCO) visited his office in October to discuss general enforcement matters.

One part of the world where Philips is seeing an increasing number of imitations is Africa, an area in which the business itself is expanding. But for a continent where several countries don’t even have IP legislation, Africa would appear, at first glance, to be an unwelcoming place for brand owners seeking to enforce their rights.

“The legal system has its challenges, but you can say any legal system has its challenges when it comes to putting your trademark rights into effect. In Africa, what seems to work best is working with organisations that specialise in consumer protection,” de Visser says.

“That’s not to say that you don’t need to go to court to file civil actions, but you can approach standard-setting bodies or those that deal with trading standards, or police-type platforms that deal with consumer protection. You can knock on their door and demonstrate that the fakes are inferior to the genuine products,” he says.

Although Philips has been expanding heavily in the east and north of the continent most recently, in October the company took action to the west, in Nigeria.

“It is the first action we have taken in several years,” says de Visser. “I think in a couple of years’ time we will become more fluent and better able to defend the interests of our consumers in Africa.”

"If you look at a general profile of a successful counterfeit product, it starts with something cheap that everybody—rich or poor—needs in a household environment." Jan DE VISSER

Almost all the counterfeits Philips sees in Africa come from China, according to de Visser, although this type of trend is unlikely to be a ground-breaking revelation for most trademark specialists. And as many people know, tackling counterfeits in China is no mean feat, often requiring the unravelling of a complex web of operations.

“In China, where counterfeits are manufactured, very often you have to hire investigators to try to find the manufacturing sources and to unravel the networks around these manufacturers—stopping them from creating a value chain that brings their products to market.

“It is not just a matter of looking at one big factory in the countryside of Guangdong province, for example. There is a network of people usually working together: one company will do the manufacturing, another will do the packaging, while another will have the foreign contacts for starting a trade operation. The degree of sophistication of the whole network you are faced with is complex,” he explains.

In response, Philips sometimes implements actions on a retail level in bigger Chinese cities, although mostly it focuses on tackling the manufacturers with the help of the administrative authorities, which are quite well-developed, says de Visser.

“To a lesser extent, we do court actions in counterfeit cases, although we have also begun to conduct cases in court based on patents and to a lesser extent designs. That did not occur ten years ago.” Overall, he says, the company takes a “multi-level approach” and is moving away from only using administrative action to taking more court action.

“The interesting thing with trademarks”, he notes, is that “when you talk about defence, trademarks can be quite powerful, sometimes much more so than patents”.

That’s because, he adds, enforcement is slightly more agile when you consider things like border detentions. “You can do detentions on the basis of patents, but it is not possible in every territory, simply because the facilities don’t exist because of international treaties.”

In the future, de Visser says, he hopes to achieve a better exchange of “business intelligence in terms of anti-counterfeiting”, because at the moment so often the company “knocks on the door of the customs authorities but there is always this hesitation to share with us information that we need for enforcing in country A as well as country B”.

He adds: “Once you can determine that a shipment is counterfeit then I want to know everything about the shipment to enable me to go to the next level of the value chain, or to go back to the manufacturing source.”

These are some of the topics de Visser plans to discuss when he speaks at the Brand Protection & Anti-Counterfeiting conference in Berlin, from November 18 to 20. Aside from providing attendees with some food for thought, the event will give de Visser another opportunity to meet the WCO’s Molle—who is also speaking—and perhaps another chance to discuss the way forward on tackling counterfeit goods.